Jim Cramer: Is Financial Rally Real or Phony?

What’s behind the recent rally in financial stocks? An era of good feeling, Jim Cramer said on “Squawk on the Street.”

“I can’t buy a share in ‘America feels better.’ I can’t buy a share in ‘retail sales are strong.’ So let me buy a share in this thing called Bank of America, which seems to kind of encapsulate these feelings,” Cramer said.

Financials led the S&P early Thursday. Bank of America shares soared on earnings expectations and better-than-expected revenue estimates.

“Sometimes you have to just look back and say, ‘What kind of era are we in? We’re in an era of forgiveness and low expectations,’” Cramer said. “So they’ll buy Goldman, which didn’t have much to write home about. They’ll take Bank of America, even though I could pick that earnings apart nine ways from Sunday. And Morgan Stanley — when I got into this business, Morgan Stanley, the idea that they would have a loss: Inconceivable.”

The sector continued to be undervalued as a group, Cramer said.

“People looking for chits to play this turn in economy, coupled with the idea that maybe the European banks are going to raise capital,” he said. “And they’re choosing this $7 chit that is Bank of America, and this $18 chit that is Morgan Stanley. I don’t blame them. It’s a way to be in the game.”